Tourism sector cuts jobs

There was a significant decline in Namibia's travel and tourism sector last year and statistics show that 66% of hotel operators have laid off staff following a turbulent 2017.

Meanwhile a further 54% of businesses plan to impose a recruitment freeze or staff cuts within the next three months.

Tourism business performance has also declined, with revenue and capital expenditures decreasing

The travel business will remain subdued in 2018, and is only expected to return to positive territory next year.

This is according to the FNB/Fenata tourism index, which shows that the sector contracted by 8.4% during the fourth quarter of 2017.

“After a dramatic and unprecedented year, the tourism sector was certainly shaken, if not stirred, as a result of a general slowdown in consumer spending power. This further impacted spending on travel and tourism in 2017,” says FNB analyst Josephat Nambashu.

According to him all four quarterly reports of 2017 speak to a significant decline in the country's travel and tourism sector, with the FNB/Fenata travel index contracting quarterly throughout the year.

Nambashu says given the economic backdrop, it is no surprise that the index retreated deeper into the negative after another set of disappointing fourth-quarter figures.

“The foreign currency translation provided some support during the quarter on the back of a weaker rand against the euro; however, it was the load factors and bed occupancy rates' negative trends that drove the overall index down.”

According to him load factors, which measure the capacity utilisation of airlines, show that even though international arrivals to Namibia continued to grow they did not match the growth in flights and as a result load factors fell.

According to the European Travel Commission, tourist numbers to Africa as a whole grew by only 6.6% last year, which demonstrates considerable slowing in recent months.

Nambashu says occupancy rates were also subdued, decreasing by 3.8% when compared with the same quarter last year.

Of those beds occupied, only 17.5% were by European nationals while Americans took up about 4.1% of beds available.

Tourists from France were the largest percentage, followed by those from USA and Canada.

The FNB/Fenata tourism index further states that tourism operators expect to see improved tourist numbers during the first quarter of 2018, with 52% anticipating increased revenue during this period.

Almost three quarters of tourism businesses expect improved business performance going forward and a mere 4% expect a downturn in their businesses in the coming three months.

“However, we are still of the opinion that the ever-increasing operational costs in the sector will pose a threat to the ability to compete in the long run for some, in light of the deteriorating load factors. At some point airfares will have to rise or unprofitable routes will be closed. Either way, Namibia will become increasingly uncompetitive, which does not bode well for the industry's growth aspirations.”

According to Nambashu the tourism industry continues to face challenges including the general economic slowdown, lack of quality accommodation for larger groups, business costs and lack of readily available capital for investment. “These make up some of the worrying issues for firms consecutively over the past three surveys.”

He said a total of 40% of firms ranked these as their number-one concern.

Inexperienced staff was also ranked as a worry, making it the second highest issue throughout the year. Other challenges include reduced consumer confidence, aviation access and the tough competition from the neighbouring countries South Africa and Botswana.

ELLANIE SMIT